Part B goes more into detail on the challenges of the implementation of reverse factoring. It explains the internal and external resistance regarding the supplier finance solution and how Nestlé took steps to overcome challenges, even when facing the economic crisis of 2008. The end of the case describes how suppliers quickly adopted RF in other countries like the UK and how Nestlé’s CFO would have to decide whether or not to roll out the supply chain finance solution in other countries despite the difficulties faced in Russia.
Nestlé Russia LLC - Supplier finance programme (A) DO1-137-A-I
The Russian Market is of strategic importance to Nestle S.A., the world’s biggest consumer goods company, headquartered in Switzerland. However, the operating environment in Russia is unique in terms of the trade terms that are the norm. Business to business transactions are primarily carried out on a near-cash basis. This places large demands on the working capital requirements for companies like Nestlé that operate between retailers and suppliers in the supply chain. Nestlé Russia’s CFO Philippe Blondiaux, charged with finding a solution, considers reverse factoring, at the time of case writing the most popular supply chain finance instrument (Financial Times 2009). The case analyses the implementation of the supplier finance solution and its viability of implementation in other geographies.
Overall the decision of the supplier is analyzed from a financial, procedural and relational point of view and is relevant for courses related to operations and supply chain management.